Puma profit hurt by falling sales in Europe, China

FRANKFURT Wed Jul 24, 2013 3:42am EDT

A man is reflected in a window with a Puma sign, at the factory outlet store in Herzogenaurach near Nuremberg April 10, 2007. REUTERS/Michaela Rehle

A man is reflected in a window with a Puma sign, at the factory outlet store in Herzogenaurach near Nuremberg April 10, 2007.

Credit: Reuters/Michaela Rehle

FRANKFURT (Reuters) - German sports apparel group Puma SE (PUMG.DE) reported lower-than-expected second quarter results, hurt by falling sales in China and southern Europe as well as the effects of the weak yen in Japan, its second-biggest market.

The 4 percent fall in sales and 34 percent fall in operating profit show the scale of the challenge facing new chief executive Bjorn Gulden, who joined Puma from Danish jewellery chain Pandora (PNDORA.CO) at the start of the month.

Puma said on Tuesday that sales in the Asia/Pacific region fell by 7.2 percent, hit by high stock levels in the Chinese market and the weak yen.

Market leader Nike (NKE.N) also referred last month to the difficult market in China, where it reported flat advance orders for its products.

Puma has increased prices in Japan, which accounts for just over 10 percent of sales, to mitigate the weak yen, following companies such as Apple Inc (AAPL.O) and Tiffany (TIF.N).

Shares in Puma, which is 83 percent controlled by French luxury goods group Kering (PRTP.PA), dropped 2.7 percent in early trade to 211.20 euros, underperforming a 0.3 percent fall on the MDAX index for medium-sized German companies .MDAXI.

Puma reported sales for the quarter of 692 million euros ($915 million), a fall of 8 percent unadjusted for currency effects. Analysts had expected 709 million on average.

Earnings before interest and tax (EBIT) dropped 34 percent to 31 million euros, compared with expectations for 34.7 million euros.

Puma also reiterated its 2013 forecast for sales to fall by between 1 and 5 percent for the year as a whole.

Kering will report results on Thursday, while rival Adidas (ADSGn.DE), based in the same southern German town as Puma, will do so on August 8.

(Reporting by Victoria Bryan; editing by Christoph Steitz and Elizabeth Piper)

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